The Year In Review

NIBA 2007

Year in Review

Market - Background

133 licensed insurers - 112 were general insurers and 21 reinsurers.

Market consolidation continues. Insurers buying insurers – brokers

buying brokers and even insurers taking strategic stakes in brokerages

The most notable movements:

The $7.9 billion ($US6.11 billion) acquisition by No 2 insurer Suncorp for No 3 insurer Promina.

The acquisition of OAMPS by Perth-based industrial conglomerate Wesfarmers, which already owned middle-range insurer Lumley.

Wesfarmers has continued to buy brokerages, including NZ’s largest locally owned brokerage, Crombie Lockwood.

Austbrokers and IBNA have entered an open-ended alliance to work together distributing insurance products (“AIM”)

Steadfast announced no changes to its current structure at this stage.

RIBA expanding - taking on brokers outside Victoria

Distribution

Brokers continue to dominate distribution in the commercial insurance market.

Up about 12% in the past five years (to 75%)

Brokers are regaining market share in personal lines. Up 6% (to 39%)

Insurers

LIMBO market --- how low can it go? Record result for insurers despite intense competition, lower

investment returns and impact of June floods (insured losses approx $1.5B )

Insurers reported gross premium revenue of $30.5B, while underwriting profit up 30% to $2.84B.

Domestic motor vehicle and household insurance made up the largest portion of gross premium revenue at 21.7% and 14.9%.

NSW/ACT insurers accounted for 42.8% of Australia’s total gross premium revenue. The region dominated all classes of insurance except employers liability, for which WA accounts for 54.9%.

In total premium revenue from PI insurance fell 5.6% on the previous financial year to $1.3 billion. Public and product liability gross premium revenue also fell to $1.9 billion.

Overall, industry has gross value of $15B = 2% of economy + employs 96,000.

NIBA’s Mission Statement

“To constantly identify, meet and represent member needs and expectations with excellence and enthusiasm.”

NIBA Organisational Chart as at August 2007

NIBA BOARD

CEO

Divisional and Specialist

Committees

YP’s

Manager Finance& Operations

Professional Development

Executive

ConsultantsRegulatory/ LegislationTechnical ServicesPublications/ PR MarketingConventionPI FacilityHREducation/Courses

Registrar/ Member Services

Co-Ordinator

NIBA College National Education

Co-Ordinator

CPD/Seminars

QualificationsTraineeships

Student liaison

Divisional Secretaries(Part Time)

Receptionist

Admin Assistant(Accounts)

Admin AssistantsAdmin

Assistant(Part Time)

NIBA Board - role

To be visionary & guide the future for NIBA and its members

To assess, plan and govern the affairs and policies of NIBA

To maintain ongoing dialogue and collaboration with key stakeholders through the sharing of knowledge and information

NIBA Board – role (cont.)

To ensure effective & viable operationEnhance the “profession”Best position NIBA and its members for

future

Divisional Committees

Regular meetings and local input on issues

Organise at least 2 social, networking functions which reflect a good image for NIBA and members

Produce annual activity plan Business/UWA expos in most states

Young Professional Sub Committees

Mission Statement:

“Advance aims and objectives of NIBA by providing and promoting an active business, educational and social network for YP insurance brokers”

YP committees - role

To report thru respective State Divisional committees

Provide input on issues relating to YP’sDevelop relevant training and education

in liaison with NIBA CollegeImplement activities to promote broking

as a career of choice

NIBA Key Result Areas

Government affairs/lobbying Broker training and education (NIBA College) Technical services, website, advice (FinServ) Member Services (advice, PI Facility, HR) Marketing promotion and publications

(McMullan Conway) Convention Administration/Finance/Membership

Government Affairs - objectives

Promote brokers interests to key stakeholders including ASIC, Treasury and government at all levels

Enhance NIBA’s profile as peak body representing risk intermediaries

To best position members

Government Affairs –2007 hot spots

Code of Practice – launched March 07 (no problems so far) EDR schemes looking to merge FSRA – ongoing refinements/fine tuning Simple regulatory system - NIBA support ASIC occupied by property finance industry (Westpoint, Fincorp,

Bridgepoint and mortgage industry - but brokers gaoled!) DOFI’s/DMF’s – support in principle but working thru concerns PI – transitional arrangements, concerns Taxation – greater traction on argument FSL/deductible (Vic) (on business with over $50m insured valued) – strong

NIBA lobbying - Govt. backs down. Also effective admin. arrangements for handling net rating Workers Comp – active committee NSW, other discussions in

ACT and Tasmania

NIBA Finance

Finance Committee reports to BoardAim to operate viably under sound

financial criteria and proceduresMaintain a reserve = 6 months operating

costs (around $3m currently)To target a min. 15% margin on activities

and functions$2.6M back to members in past 5 years

Membership

17%

Convention

26%

IRP

14%

Interest

7%

Education

14%

Professional Assessment

3%

Gazette

4%

Divisional

11%

Other Income

4%

Broker Survey

0%

NIBA College - objectives

Provide … relevant, reliable, innovative educational products and services to the broking sector … and quality educational advice to licensees and their staff

Represent … the broking sector in government and industry educational forums

Ensure that members have access to a compliant RTO to meet their qualifications requirements

Promote … the benefits of broking careers by providing and supporting traineeship programs

Promote … College as a quality educational provider in competitive market

Communication

Ongoing media relations (AFR, BRW etc) NIBA hotline - over 40,000 seek referrals to

NIBA brokers (Needabroker) IC liaison – taxation, flood, under-insurance,

liability, workers’ comp etc. Around 100 speeches, presentations,

briefings (CEO, President, staff) Sundowners around Australia

Communications (cont)

“Insurance & Risk Professional” Gazette - popularMarketing kit completed – 12 chaptersWebsite development ongoingNew Warren Tickle Memorial AwardNewshots, surveys, questionnaires

Membership

Despite rationalisations & mergers – principal members remain steady

QPIB or equivalent = 2491 (June 01 1837 )

Principals = 440 (462 in 01)Branches = 720

New Associate membership

Allows entrants that meet the ASIC min Tier 1 requirement and have less than 4 years exp. to join NIBA.

Then encouraged to do additional modules to complete Dip Fin Services (Insurance Broking) and upgrade to QPIB

Then ultimately to FNIBA with Adv. Dip.

Member PI Facility

Manager - Gallagher Broking ServicesAim – “ensure relevant, economical and

reliable facility for all members”Competitive marketPremium pool over $2m, 89 membersLow claims, no deterioration on earlier

years

Life Brokers & Advisers Sub Committee

Assisted ongoing lobbyingRepresentation on industry groups

representing life/investment sectorWorking with divisional committees Gwen Fletcher - awarded Member of

the Order of Australia (AM) in Queen’s Birthday Honours list

NIBA - industry liaison ongoing

IC, FPA, UAC, clusters, government, consumer and related groups

Strong links with international broking community as CIIBA secretariat

CIIBA a member of WFFICEO on World Council Executive

2007 Highlights - year of consolidation

Launching Code & Promotional campaign Generational change - new Warren Tickle

Award and State YP winners Modernisation of QPIB Victoria dumps FSL (on business with over $50m insured valued)

DOFI Exemptions – they listened! Industry advertising – nailing AAMI!

Finally …

“Achieving consensus may not always be possible … but a function of any representative body is to shape, guide and empathise with its membership as to sharing its aims and objectives.”